Dartmouth’s D’Aveni: China Will Stimulate Its Way Out of Slowdown

Few would argue that the Chinese economy is not cooling off. What is intensely debated, however, is the extent of that slowdown. Some say that the nation is in for a hard landing. Richard D'Aveni, author and professor of strategic management at Dartmouth's Tuck School of Business, dismisses such talk.

Following a recent visit to China, D'Aveni tells Yahoo, “You can't count them out. They will stimulate their economy out of this situation.”

“This is still the largest economy in the world. They have $3.2 trillion dollars of American cash in the bank,” he said.

Experts have been predicting a crash in China for years, according to Business. But the country has been able to get through multiple crises, lifting hundreds of millions of people out of poverty in the process, Business Insider adds.

Still, there are those who argue that this go round could be different, especially given the macroeconomic complications, such as the eurozone crisis.

There has been a slew of sluggish data coming of out China recently and included among it has been declining export orders. China has an export-driven economy and the eurozone is its largest trading partner. Data show export orders declined at the fastest pace in 42 months in September.

Many are questioning whether the economy is in fact heading for a hard landing or if policymakers are really in control of the slowdown this time, Business Insider says.

D'Aveni believes that there is really too much focus given to the small ups and downs and that stimulation of the domestic economy will replace the export dependence and keep China on a strong growth track.

"Everybody's apoplectic about slowing growth, but they're still growing five times faster than the U.S.," he tells Yahoo. "No matter what happens, they are still sitting on trillions of dollars reserves and the country has little debt.”

Furthermore, he suggests that situations that would be more challenging elsewhere are less so in China.

“The Chinese because of state capitalism have many more tools to manage a bubble than we do in the United States or than Japan had when their bubble burst in the 1990s,” D'Aveni says.

“They have so much control over the economy that they can gradually reduce the price and make it work.

“They are not the Japanese, very different culture. They're natural born capitalists down underneath,” D'Aveni explains.

Few would argue that the Chinese economy is not cooling off. What is intensely debated, however, is the extent of that slowdown. Some say that the nation is in for a hard landing. Richard D'Aveni, a professor of strategic management at Dartmouth's Tuck School of Business, dismisses such talk.